Conagra Revels in 17% Price Increase; 'Never Seen Anything Close to That' Says CFO
On the heels of price increases that exceeded inflation, Conagra Brands expects inflation to moderate at least through the first half of this year. So will its price increases. The company also is working to increase volume, not just sales that were expanded by price hikes.
In announcing its second quarter 2023 financials (for the period ended Nov. 27, 2022), company executives on Jan. 5 said they “expect both gross inflation (input cost inflation before the impacts of hedging and other sourcing benefits) and results from its Ardent Mills joint venture to moderate through the remainder of the fiscal year.”
CEO Sean Connolly noted, “The 8.6% increase in organic net sales was driven by a 17.0% improvement in price/mix, which was partially offset by an 8.4% decrease in volume.”
Frozen food sales were up 27% and 26% in the first two quarters of the company’s fiscal year, which began last May 31. Snacks were up 35% and 41%; “staples” were up 15% and 22%. International sales declined 1.3%, mostly due to currency fluctuations.
In that second quarter, net sales were $3.3 billion; $6.2 billion for the half-year.
“We won’t have any more significant price increases unless our cost, our inflation estimate, starts to go back up,” David Marberger, Conagra’s chief financial officer, told the Wall Street Journal. He said Conagra currently forecasts inflation for the fiscal year ending in late May at around 10%, with about 6% from December through May. “If it continues [on] the path that it’s going, if we take any pricing, it’s going to be pretty moderate.
“I’ve been in this industry a long time. I never, ever remember that kind of a price increase,” he said of the 17% hike in the most recent quarter. “Nothing close to that.”
